Madam Speaker, pursuant to section 47(1) of the Public Service Employment Act, I have the honour to table today, in both official languages, the second annual report to the Prime Minister on the state of the Public Service of Canada.

This document should be referred to the Standing Committee on Government Operations.

moved for leave to introduce Bill C-251, an act to provide that Remembrance Day be included as a holiday in public service collective agreements.

Madam Speaker, it gives me great pleasure in this new Parliament to introduce this private member's bill. I introduced the same bill in the last Parliament and we almost got it through. It passed second reading but unfortunately had some difficulty in committee. It enjoyed all party support to some degree.

The bill seeks to ensure that Remembrance Day is kept as a statutory holiday under the Public Service Staff Relations Act. It does not in any way try to extend the bill into any of the collective agreements that come under the Canada Labour Code. It reaffirms that Remembrance Day is a holiday, it is a special day of remembrance and it should not be traded away in collective agreements.

The original intention two years ago in introducing a similar bill was because there had been some negotiations in the public sector in which both government and the unions put Remembrance Day as a holiday on the table. We were told at that time that Remembrance Day could have been traded as a holiday, say in lieu of an extra day after Boxing Day.

Remembrance Day truly is not a holiday but a day to remember those who have made the supreme sacrifice so that we and others could be free. This bill seeks to regularize, statutize and ensure that all agreements entered into under the Public Service Staff Relations Act could not make it a tradable holiday. It would have to take place and it would have to be observed on the date, November 11.

Madam Speaker, I would simply like to ask the House if there would be unanimous consent to revert to the presentation of reports by standing and special committees to give the hon. member for La Prairie the opportunity to present the report of the Standing Committee on Public Accounts.

Madam Speaker, I have the honour to present this morning the second and third reports of the Standing Committee on Public Accounts.

In its second report, the committee examined the estimates of the Auditor General's office for the 1994-1995 fiscal year. Committee members heard testimony from the Auditor General concerning the role of his office and the funds allocated to it for the purpose of carrying out its mandate. The committee is confident that the Auditor General's office has sufficient resources to carry out its mandate during the current fiscal year.

With respect to employment equity, women account for 17.7 per cent of the employees in the management category within the AG's office, whereas the goal at the outset was to achieve a 15-per-cent representation. Therefore, the objective set has been surpassed.

As a result of sound management and an improvement in productivity, the AG's office has successfully reduced its expenditures for 1994-1995 by 6.3 per cent. You will agree that it has set an example for other government departments and agencies to follow in endeavouring to provide cost-effective services to Canadians.

The committee also examined and reported on vote 30 under the heading Finance in the Main Estimates for the fiscal year ending March 31, 1995.

Lloyd AxworthyMinister of Human Resources Development and Minister of Western Economic Diversification

moved that Bill C-28, an act respecting the making of loans and the provision of other forms of financial assistance to students, to amend and provide for the repeal of the Canada Student Loans Act, and to amend one other act in consequence thereof, be read the second time and referred to a committee.

Madam Speaker, may I ask for the indulgence of the House for a moment? I would like to provide a special welcome in our galleries to the grades 3 and 4 class of Hopewell school with which I have a family connection. It is very nice to have them here.

Madam Speaker, it is appropriate that I am here to introduce the bill on education and student loans at a time when we have such a youthful audience in our gallery.

Madam Speaker, it is a great privilege for me to speak today on the reform of the student loans program.

As you know, we were elected to create jobs, help the economic recovery and give young Canadians hope again. That is why I announced a youth employment and training strategy a few weeks ago. I can tell you that we are moving ahead very quickly.

Recently, senior provincial and federal officials met to discuss the trainee program. We hope to announce the first initiatives very soon, which will give 60,000 young people job training in business within three years.

As members of the House would also know-I have certainly had many representations in this regard-we will be creating over 60,000 jobs for young Canadians this summer. That will be an increase of 20 per cent over last year. This program has always been well received and is particularly appropriate for young people.

Just last Friday in Winnipeg I announced the first 37 lead sites under the youth service corps. We are already engaged in a number of initiatives to try to give some new sense of hope and aspiration to young Canadians.

Today I want to address the House on another very central or key priority in the youth employment strategy and the major reforms we propose for the Canada student loans program.

Over the years the Canada student loans program has been a fundamental foundation of the entire higher education system. We rank among the top countries in the level of public assistance for university and community college students. We are certainly much more generous and extensive than many other countries in the OECD. Over 900,000 full time and more than half a million part time students are pursuing post-secondary education to make their futures brighter and to give them some sense of the skills they will need for the future.

However, like many other social and educational training programs sponsored at the federal level, our student loans are no longer designed to meet today's needs. There are very serious gaps in the programs which allow young people to fall between the cracks or put barriers or disincentives in their way.

There are rigidities in the system which do not allow us to provide for the flexibility that today's education requires. Young Canadians, their families, the educational community and student groups have repeatedly called for fundamental reform in the area of student loans. The bill is the first attempt in more than 30 years to try to come to grips with these necessary changes.

We propose in the legislation a much broader and more inclusive system that will bring people in from the margins and help those most in need. The result will be a system with various components and greater access to funding. Support in school and after school will facilitate employment, security and opportunities for learning. In short, it will give young Canadians the tools they need to achieve educational goals.

I tell members of the House that in preparing for the legislation we consulted with a wide variety of people: the Canadian Federation of Students, the National Educational Association, disabled students, the Association of Universities and Colleges, and the provinces. We all agree there are at least three main reasons change is required.

First, the Canada student loans program has been greatly underfunded. Full time loans have been frozen at a level of $105 per week since 1984. Yet education costs during that same period have jumped by over 58 per cent. Every member of Parliament has encountered students and former students who have had problems obtaining enough resources to continue their studies or who had difficulty repaying their loans. The proposed bill would address both these problems by substantially increasing the aid to students and by introducing measures that would ease the problems of repayment.

A second major reason for the change is the changing requirements of the labour market. The majority of jobs created by the year 2000 will require a minimum of 17 years of schooling. Yet approximately 60 per cent of our young people currently enter the workforce directly from high school with no further structured education or training. The great tragedy is that close to 30 per cent of young people drop out of school before they even reach the high school level. I do not think there is any greater argument or any greater reason that we must substantially improve access to our post-secondary education system.

There are also very important changes taking place in the population, especially with respect to those using our schools and universities. Although the majority of students are young people under the age of 25, increasingly Canadians born in the fifties and sixties are also returning to school. There has been a remarkable increase in the number of people who want to come back to school. This means that we must provide substantially better support for part time students or for adult returning students. Let me now present what in concrete terms we propose to do in the legislation.

First, we will increase the loan limits by 57 per cent or to the same level they would have been if there had not been a 10-year freeze imposed by the previous government. As a result full time loans will increase to $165 a week from $105 a week.

Second, the proposed act works for students with disabilities whose numbers in colleges and universities do not come close to reflecting their proportion of people in the population. Students with disabilities confront many obstacles to full participation in our economic mainstream. Learning should not be one of them. It is believed that fewer than 3 per cent of Canada's full time university and college students are those with disabilities.

The bill will deal directly with those situations by reducing the barriers. A survey by the National Educational Association of Disabled Students reported that taken together federal and provincial aid to students is totally inadequate. It also reported that $3,000 or less annually would help to meet the shortfall.

As a result we are providing in the legislation permission for students with permanent disabilities to qualify for grants up to $3,000 a year. This means that for the first time we will open the doors for those with disabilities in a very major way. It means that they will have more flexibility in their programs. They can take fewer courses and have more time to complete their studies. Students with permanent disabilities will also continue to be eligible to apply for forgiveness of the loans if they run into difficulties with repayment.

As many members of the Chamber will recognize, there are inequities for women in higher education. Current imbalances must be addressed. Although women are now well represented at the undergraduate level of universities and colleges, they are substantially under-represented in areas of post graduate studies. One-third of doctoral degrees are awarded to women. Only 9 per cent of doctoral degrees in areas like engineering and applied sciences go to women and only 17 per cent of those are in mathematics and physical sciences. This is a situation in which positive intervention on the part of government can help to correct these inequalities. Special opportunity grants of up to $3,000 a year will be available to women taking doctoral programs. Through this we will be able to substantially increase their access to fields like engineering, physical sciences and applied mathematics.

A third area of major change is the need to cope with the increasing number of people coming in as part time students. Part time students presently make up over one-third of all college and university enrolments in Canada. Many of them are helped by employers or work to finance their own studies. Clearly they do not need a large amount of government support, but there is a substantial minority of part time students who need financial assistance to continue in school. Student groups and educational associations have called for improvements in the part time loans program.

As Canadians go through the cycle of lifelong learning there will no longer be a question of simply being able to go to school as a young person, graduate and work for the same employer year after year. We are now in a situation in which they will be changing their workplace perhaps four or five times during their

working careers. To do so they will constantly have to go back to school to improve skills, upgrade education and substantially enhance their educational opportunities.

As a result we are proposing to raise the maximum loan for part time students by almost 60 per cent from $2,500 to $4,000. In addition under the new financing arrangements the repayment burden on part time students would be reduced by allowing them to pay only the interest on the loans while they are studying.

We also recognize that students who are single parents or people on income support assistance may not be able to meet the eligibility requirements for full time loans. These students need special attention to top up their resources, and the bill will provide it. Therefore special opportunity grants of up to $1,200 a year will be available to part time students with high financial needs. That will allow the single parent with children a substantial opportunity to go back to school. These grants will be used for direct costs of education such as tuition, books, local transportation and child care. It will provide a new foundation for part time students, especially single mothers, to go back to school.

At the present time the average student loan is around $6,000. However about 7 per cent of students graduate with debts of more than $15,000. Several provinces have recognized that very heavy debt burden and have implemented systems of deferred grants or loan forgiveness linked to the completion of studies.

In consultations on the reforms it became obvious that increasing loan levels would also increase debt levels. To ease the debt burden of high need borrowers we are creating a system of deferred grants to equalize and put them on a parallel with less needy students. Under the revised program individuals with Canadian student loans in excess of $16,000 on graduation would be eligible for a deferred grant. Under the new provisions we estimate that up to 21,000 students beginning studies in 1995-96 would be eligible for deferred grants when they graduate at the end of the decade.

Easing the transition from school to work makes eminent good sense. Canada wants and needs young people to pursue higher education. We are also urging all other Canadians, middle aged or old, to improve their abilities through lifelong learning. We cannot point to education as a key to success and then deny support to people who want to go back to school. The transition from school to work can be very difficult. Therefore the deferred grants will substantially help students with high financial need.

Under the present system the federal government can pay the interest on loans for up to 18 months. Their unemployment may be either as a result of their inability to find employment or because of a temporary disability or illness. This interest relief provision is effective in reducing the number of borrowers who default after leaving studies. However former students in low paying jobs cannot obtain this benefit. We intend to extend interest relief to include those in part time or low paying work. In other words, we will not penalize people for working at entry level jobs which allow them to gain experience and show employers what they can do.

A major problem with the existing program that has been highlighted by the Auditor General is the default issue. The bill would address the problem by authorizing agreements with lenders based on the risk sharing approach. Under the new arrangements the existing 100 per cent government guarantee would be removed and lenders would assume the liability for loans that must be repaid. Many loan defaults under the current loan program occur because lenders do not have the incentive to be diligent in servicing and collecting student loans.

The new financing arrangements are designed to provide incentives for lenders to give better services to students and for students to succeed in their studies. Lenders will help prevent defaults by offering income sensitive terms of repayment. The loan package was designed to meet the needs of students and to ensure that each student is treated as an individual, not simply as a number.

Let me stress that these new financing arrangements will not limit the access of students to loans. The basic objective of the program is to ensure students the credit and access they need to pursue their studies. That is why governments have a role to play in student assistance. The underlying objective of the student loans program will remain and all eligible students will continue to receive their loans.

I am sure there is a number of other major initiatives in the bill that my colleagues on this side of the House will address.

I would like to make two additional comments which I think provide some new flexibility. First, as it deals with provinces.

For example, as hon. members know, Quebec has its own student loans system. Unfortunately, under the old system, there was no cost sharing for students with special needs, as I said in my speech. Under the new system, loans for students with special needs in Quebec will increase. Also, there will be a new cost sharing for student loans in Quebec.

I think that this is another example of co-operation between the provinces and the federal government in this important system for students and for education.

I would like to point out another feature which I personally think is very crucial. We are in a world where we have to rethink much of what we are doing in education. In particular we have to begin to look at how we can substantially increase private participation, private investment in education. I said earlier that in Canada we spend perhaps the highest percentage of public moneys to assist in higher education but we have one of the lowest records of private involvement, private participation, private investment.

In order to ensure a brand new system of learning that will encompass opportunities at all stages and all levels of life and learning, we are going to have to give more incentive back to individuals to invest in their own educational opportunities.

One way that has been explored in a few countries such as New Zealand and Australia has been the notion of income contingency repayment. It allows students who take a loan to repay at the level of their income as opposed to a flat rate so that the deterrent of having a loan or a debt at the end of your regime does not provide a barrier.

We are proposing in this legislation to introduce an opportunity to work with individual provinces to set up a series of pilot projects to test out the notion of income contingency repayment. I can say to members of the House that I have already had several conversations with provincial ministers of education who have shown an interest in this program. It will substantially rewrite the way that we provide incentives for individuals to invest in their own education without the fear of having serious debts at the end. It will provide a scaled down portion of repayment.

I think this is a sign of the future. It is the kind of building block that we can put in place to make a new revision and reform and renewal of our broad based higher educational programs. I hope members of the House will take a look at these innovations that we have brought in to provide these new opportunities and see how they can act as a new framework through which we can rewrite the blueprint for higher education in Canada.

I very much appreciate the attention of the House in introducing this important legislation. I believe it will be a very major step forward in the immediate opportunity for improvements in the level of loans. It will give a substantial increase in opportunity for students with disabilities, women attending graduate school and students of high financial need. It will provide much broader access and will be new ground in the notion of the income contingency repayment and a new system of providing a lender based system using our banks and financial institutions to provide the capital while we provide the backup guarantee.

I do not pretend that this is the end of the reform. As members of this House will know we embarked on a much broader process of social reform in the country. I hope to be able to table for members in several weeks the broad framework of what we propose. This is a very important element. I think we all recognize how crucial the necessity for better learning, for better education, for better understanding of one's skills and abilities will be. We are going to be a society based upon high education and high skilled information technology. Therefore we have to ensure that our educational system keeps pace and stays relevant to those needs.

With this I strongly recommend to the House the passage of this legislation. I look forward to the discussions in committee. I hope that we can have fairly quick and speedy assessment by members so that this new program can be up and ready for students by the school year beginning this fall. If we can do that, I think this Parliament will make a very important statement to all Canadians that we are concerned and committed to their future.

Madam Speaker, as the Official Opposition critic for training and youth, I welcome this opportunity to speak to Bill C-28 amending the Canada Student Loans Act. However, before commenting the bill per se I would like to say a few words about the presentation the Minister of Human Resources Development has made. Just to say it seems to me that he had much more to say about the programs included in this education and work strategy for young Canadians and what he planned to do with his bill than about the bill itself. As far as I am concerned, this bill exemplifies the kind of vague wording used as a smoke screen by a government which tries, unsuccessfully, to hide its centralizing designs. The bill does not say much. Unfortunately, we will have to wait for the accompanying regulations to be able to fully appreciate its impact.

One can wonder what the Liberal government's real intentions are with Bill C-28. For example, by raising the ceiling of student loans, is the government setting the stage for a further reduction of its contribution to the funding of higher learning institutions? As vague as are the wording and the general statements with regard to amending the existing legislation, one can nonetheless identify certain guidelines out of this bill.

At a time student indebtedness has become unbearable due to lack of available jobs, the government is taking measures that will only put them further into debt and make it more difficult to pay off their debts. Let us bear in mind that Bill C-28 is part of the youth education and work strategy announced April 15 by the Minister of Human Resources Development.

On that very day, I denounced this strategy that I considered as a further infringement in the area of education, an area which, according to the Constitution of Canada, comes under the exclusive jurisdiction of the provinces. Must we remind the minister that this goes against the fundamental interests of Quebec, a position which was reaffirmed unanimously in the Quebec National Assembly on April 14?

These amendments to the students grants and loans system is but one element of the social programs reform on which the Minister of Human Resources Development has supposedly undertaken consultation with the people of Quebec and Canada. What is the rush? The minister did not even have the decency to wait for the results of the consultation held by the Standing Committee on Human Resources and to secure the support of the provinces before going ahead with this part of the social programs reform.

Again, what the Prime Minister meant when he said during the election campaign that he did not want to talk about the Constitution is becoming apparent today. Reading between the lines, we can deduce, as he actually invited us to do, that from now on he will pay no attention to provincial jurisdiction and impose such things as national education standards. As it turns out, this government has not learned a thing. It is going ahead with measures that can only increase duplication which is a shameful waste of public funds.

The most important question we should ask on Bill C-28 is this: Why does the government want to change financial assistance to students? The first reason is obvious. Bill C-28 gives more power to the Minister of Human Resources Development. That is essentially the first and most important reason in our opinion.

First of all, with respect to the appropriate authority, this bill says that the Minister may designate for a province an appropriate authority, which may designate educational institutions that offer courses at a post-secondary school level in or outside Canada.

Under the old Canada Student Loans Act, the appropriate authorities were designated by the Lieutenant Governor in Council of the province concerned. This will now be done by the Minister of Human Resources Development himself because Clause 3.(1) specifies that:

3.(1) For the purposes of this Act, the Minister may, by order, designate for a province (a) an appropriate authority, which authority may designate as designated educational institutions any institutions of learning in Canada that offer courses at a post-secondary school level, or any class of such institutions; and (b) an appropriate authority, which authority may designate as designated educational institutions any institutions of learning outside Canada that offer courses at a post-secondary school level, or any class of such institutions.

(2) An appropriate authority may revoke any designation made by it under subsection (1), and any designation made in respect of the province under the Canada Student Loans Act and, in the case of a designation of a class, may exclude any named institution from that designation.

4.(1) The Minister may enter into an agreement with an appropriate authority, or with an appropriate authority and the government of the province for which the authority was designated, respecting the exercise or performance of any of the authority's powers, duties or functions under this Act or the regulations.

In this case, the Minister of Human Resources Development is the authority in an area of exclusive provincial jurisdiction recognized by the Constitution.

4.(2) The Minister-

-of Human Resources Development-

-may give directives to any appropriate authority respecting the exercise or performance of any of its powers, duties or functions under this Act or the regulations, and such directives are binding on the appropriate authority.

The minister could enter into agreements with the provinces to harmonize the administration and financing of student loans throughout Canada. Does abolishing the existing provincial loan allocation formula mean that the minister can require the provinces to respect a greater number of national standards in order to receive the allocation?

What will happen to a province like Quebec, which respects the Canadian Constitution by taking care of its own student loans, which come under the area of education, an area, again, of exclusive provincial jurisdiction? Will Quebec receive its fair share of compensation?

We also notice that, in pursuing the centralizing and insidious intentions of the federal government in matters of education and training, the Minister of Human Resources Development may now enter into risk-sharing agreements directly with lenders.

The enactment of these will abolish the existing provincial loan allocation formula established by the minister.

Another question raised by Bill C-28 is the maximum amount of loans. The act currently provides for a specific maximum amount of student loans.

This morning, the minister talked about a maximum amount but there is no mention of it in the bill. It may have been announced but it is not in the bill. There is no specific maximum amount. What the bill says is that it can be set by the minister.

Bill C-28 only says that, subject to the regulations, the lender is required to make to a qualifying student who has been issued a certificate of eligibility a loan in an amount not exceeding the maximum set out. What is this amount? Is it the 57 per cent increase in the maximum loan announced by the minister or is it something else? The part of Bill C-28 relating to the repayment of loans also raises questions. Clause 9 says that the borrower

may be liable to pay a portion of the interest during the loan period under certain conditions. What are these conditions?

According to section 10 b) of the current act, the student borrower simply does not have to pay interest during the loan period while he is in school. That provision has been eliminated.

Clause 11. (2) of Bill C-28 provides that the termination of the borrower's rights by reason of disability or insufficient family income becomes effective if the borrower's condition deteriorates after the first day of the seventh month after the month in which he ceases to be a student.

Does that mean that a borrower who is the victim of an accident or any other cause keeping him from working after the first day of the seventh month after the month in which he ceases to be a student will have to repay the loan, or will he have to declare bankruptcy? Considering that 10 per cent of personal bankruptcies in Canada are student bankruptcies, does the minister want to see that figure go even higher?

Clause 12. (1) creates a major ambiguity. It states that a certificate of eligibility will be issued to students who have attained a satisfactory scholastic standard or who are in need of financial assistance.

Can a student be refused a loan because of his marks? Who will determine the amount required by the student? Will unpaid parental contributions be taken into account? Will there be national eligibility standards?

Clause 12. (7) reads:

The maximum amount of financial assistance in respect of which a certificate of eligibility is issued, other than a loan to which subsection (4) or (6) applies, is the prescribed amount, or the amount calculated in accordance with the prescribed formulas.

How will this amount be calculated? We have no idea.

Will it be possible to give additional amounts through scholarships once the ceiling for loans is determined? This morning, the minister alluded to subsidies. We will see.

Also, clause 14. (7) of Bill C-28 states that amounts paid to compensate a province which does not integrate the federal loans program will be included in the calculation of the program net costs only if the provincial government satisfies the Minister of Human Resources Development, within a given period, that the provincial program has substantially the same effect. The provinces will have to convince the federal minister, in spite of the fact that this is a field of exclusive provincial jurisdiction.

Will the minister base his decision on national standards regarding education or education financing?

Clause 15. (i) reads in part:

-the circumstances under which a new loan- may be denied to a student, or an interest-free period- may be terminated-

Which criteria will justify such action? We have no idea.

We believe that such measures may have disastrous consequences on the future of some students experiencing financial, personal, academic or other problems.

At first glance, Bill C-28 does not look reassuring to borrowers. In my opinion, the government does not have a clear idea of the true socioeconomic situation of young people. It is worrisome to see that banking institutions have an increasingly greater discretionary power. And what about the risk premium which will probably be paid to them, given the profits they make? Banks are in the best financial position; yet, a provision is included to allow the minister to pay a premium and eliminate risks for these institutions. This is not reassuring.

Clause 15. (n) of Bill C-28 provides for the establishment and operation of a program to provide special interest-free or interest-reduced periods to borrowers, according to pre-set conditions. However, section 9. (1) of the current act provides for exemptions, under certain conditions. Is the government adding new exemption conditions, or is it amending the current ones? We have no idea.

If so, it would be interesting to have more details. Finally, I come to the most controversial clause of Bill C-28, namely clause 18 which includes general provisions. This states that the minister may enter into agreements with federal or provincial departments to facilitate the administration of the act, or to harmonize its administration at the various government levels.

This is seen as a major improvement over the existing legislation on student loans. It reflects, however the centralist concept of federalism, a concept that ignores the specific identity of the provinces. There is a desire to control everything from the top, with no concern for the people who are trying to get along on what they have.

After this brief overview of the main provisions of Bill C-28, there is an important point that I feel should be made. The government apparently wants to reform the federal loans system by regulation, but these regulations, which undoubtedly would shed more light on the matter, are unfortunately not available today. The most immediate impact of Bill C-28 may well be to increase student debt and thus compromise the future of our young people who, in addition to getting deeper in debt, may not get the jobs they want when they graduate. This will make it

harder for them to pay back their loans and may increase the number of personal bankruptcies.

Perhaps I may expand a bit on the subject of student debt. In Quebec, for instance, university tuition fees almost tripled in three years. In fact, the situation has been similar across Canada since 1984. Since Quebec had the lowest tuition fees, there was a certain amount of catching up to do, but the fact remains that the increase was rather drastic, and more is yet to come.

As governments reduce their financial commitments to educational institutions, these will have to raise the amounts they charge students. In Quebec, the average amount of student debt at the post-secondary level is $8,500. It is estimated that in Quebec, 60 per cent of parents pay nothing towards their children's post-secondary education, and since the parental contribution is taken for granted by governments when they calculate the amount of financial assistance to be given, these students are actually losing quite a bit of money in the process.

As for personal bankruptcies, it is estimated that 10 per cent of these are filed by students. That is a considerable proportion. And these bankruptcies represent a major cost for governments. As a member of the Human Resources Development Committee, when we were analysing these particular budget items, I heard officials say it was difficult to establish the cost with any precision because there were tremendous problems with recovery.

So what happens now? Because of a lack of effectiveness in this respect among governments in English Canada-in Quebec, the Government of Quebec has a withdrawal right-the responsibility is transferred to the banks, and when you consider the attitude of some banks, there is certainly cause for concern.

According to an article published on April 11 in Le Devoir , in Quebec in 1993-94, former students who went bankrupt had loans totalling $4.7 million. This is more than twice the loans for 1990-91, which at the time totalled $2.2 million. That is a lot of money.

We therefore believe that this bill will increase the number of loans, and thus the number of bankruptcies, as well as the amounts involved.

More and more students are obtaining loans and bursaries. In Quebec, an estimated 175,000 students at the post-secondary level are receiving financial assistance this year; in other words, nearly 50 per cent of the students enrolled at this level.

In British Columbia, it cost the government $17 million in 1992 to reimburse the loans of 3,037 former students. In British Columbia, 3,037 former students were unable to pay back their student loans. Seventy per cent of the students were apparently unable to pay back their loans because they were unemployed, which seems pretty obvious, but I think we should realize that unemployment was the culprit in 70 per cent of these cases.

According to an article published in Le Droit on January 10, 1994, 248,000 students received financial assistance directly from the federal government in 1991-92, for a total amount of $743 million. Although the vast majority of student borrowers pay back their loans, we must realize that 13 per cent will not be in a position to do so.

The Minister of Human Resources Development has tabled a bill on student financial assistance which unfortunately does not take into account recommendations made by the student community and especially by student associations. So what do students want?

First of all, the associations which I contacted in Quebec want a student assistance program to be developed, one which would draw a distinction between tuition fees and living expenses. In determining these expenses, consideration would also have to be given to the true costs of the program or field of study in question, because this can vary according to the field, region of the country, family situation and associated costs.

Secondly, when it comes to calculating loans and bursaries, parental financial assistance should not be a determining factor. All students should be considered as independent. The amount of the loan or bursary should not be an incentive for students to continue living at home, but rather it should encourage them to acquire a certain measure of independence as quickly as possible after reaching the age of majority. Obviously student associations in Quebec recommend that the federal government withdraw completely from the field of education, in particular post-secondary education.

The federal government wants to increase the amount of student loans without taking into account the real ability of students to repay the money. Precariousness is a concept used with growing frequency in discussions about youth employment. It is concept which the government does not seem to grasp fully. So-called precarious jobs are the exclusive lot of young people in Quebec and in Canada. Fifty per cent of young Quebecers and Canadians are reported to hold down precarious jobs.

Generally speaking, a precarious job is one that is low-paying, often paying minimum wage, with minimal opportunity for advancement. A precarious job is one with no security, often non-unionized, one that can disappear overnight for various, more or less justifiable reasons. A precarious job is one which a person holds out of necessity and would willingly give up for something better. Young people with precarious jobs often hold many such jobs for relatively short periods of time. Therefore, the definition of a precarious job stands in sharp contrast to that of a regular job with a good salary, job security and a pension plan.

Why is it that the majority of precarious jobs are held by young people? The primary reason for this phenomenon is the growth of the services sector. Seventy per cent of all jobs are in the services sector. Furthermore, 70 per cent of young people who work do so in the services sector, that is the restaurant, hotel and general services industry.

Another factor responsible for the widespread precariousness of jobs held by young people is the increase in unemployment in all age groups. Clearly, young people are especially affected because, as recent entrants in the job market, they often must settle for the leftovers, that is the jobs no one else wants. Another identifiable cause of job precariousness among young people is the emergence in the past few years of a second wage scale reserved exclusively for new job market entrants that businesses can let go if necessary.

Furthermore, adolescence has long been considered a period of transition between childhood and adulthood. The situation has changed, however. Where once it was traditional for young people to study full time before moving on, almost automatically, to the job market and then starting a family and buying a house, now the line between adolescence and adulthood has grown somewhat blurred. Indeed, it is not unusual in this day and age to see young people having children, working and studying all at the same time.

Young people experience all kinds of situations that were uncommon in the past. Their lives are far more stressful than ours were when we were their age. They leave home later because of their chronic inability to make it on their own. According to the last two census reports, 41 per cent of young people between the ages of 20 and 24 lived with their parents in 1981 compared to 50 per cent in 1991. If the trend continues, this figure will hover around 60 per cent by the year 2000.

Furthermore, young people are heavy consumers. This finding is consistent with what the social model suggested during their childhood. However, the living conditions of today's young people are vastly different than those of their parents. Two major considerations dominate the relationship between young people and employment, namely access to employment and loss of employment. Young people must be patient when it comes to finding a job, while at the same time, they can only hope to hold on to the job they ultimately do find.

In 1986-87, 60 per cent of young people aged 20 to 24 changed jobs; 45 per cent of this group changed jobs twice, not counting those who simply lost their job and could not find another one. In 1992, young people aged 16 to 24 were without work for 17.6 weeks. The new realities of the labour market hit our young people hard.

Nearly 40 per cent of those who work have a part-time or contract job. Thirty per cent of employed young people work in companies with 20 employees or less, which reduces their chance of keeping their job because, as we know, small business is very volatile.

In Quebec, 72 per cent of employed 20- to 24-year-olds are not unionized; 85 per cent of these young people have no pension plan and will not be eligible for one. This is very significant for the long-term security of our young people, especially since they enter the labour market when they are between 25 and 30 years old, compared to 20 years old for those entering the labour market in the 1970s.

Young people would also like to be able to save for retirement, but as student debts increase, given the labour market and job entry conditions we just mentioned, we may well wonder whether the government has evaluated the long-term impact of this action. Young people are increasingly aware of what they have to do. They study more than their predecessors. They are proud and fear both rejection and their difficult living conditions. But young people also want to be independent. They do not want to depend even more on governments and financial institutions. But this government tends to consider young people as a threat, as potential social problems to be contained.

Did the government seriously consult those involved in the student community before it reformed student loans? No, Madam Speaker. It proceeded in the same way as with unemployment insurance reform. Education was one of the few hopes young people still had to avoid unemployment, but what is the situation now, since 50 per cent of the young unemployed have not graduated? It is true, but 33 per cent have a high school diploma, 17 per cent a college diploma and 8.6 per cent a university diploma, and still they are unemployed.

The government must make it possible for young people to study with dignity and without becoming too indebted. The government must launch a real youth employment strategy.

Now I would like to say a little about education funding, because as student debts are allowed to rise, we must see that the federal and provincial governments throughout Canada are spending less on education.

As a result, these institutions have no choice but to raise their tuition fees. Under particular arrangements between the federal and provincial governments, the federal government contributes to post-secondary education through established programs financing; 32.1 per cent of EPF transfers are for post-secondary education. Of the funds allocated to education in Quebec in 1991-92, of course most came from the provincial government, $10.1 billion or 82.4 per cent of the total; 7.7 per cent from private sources; $913 million or 7 per cent from the federal government and $302 million or 2.5 per cent from local governments.

Statistics Canada estimates total education spending in Canada at $50.6 billion. In 1991-92, $14.3 billion or 28.2 per cent of total spending was spent on post-secondary education. For that period, Quebec spent a little over $4.2 billion on post-secondary education, or 34.5 per cent of the total education budget, compared to Ontario, which spent a little over $5 billion on post-secondary education, or 25.3 per cent of its total education budget.

Between 1973-74 and 1991-92, the average annual increase in government spending on post-secondary education was 10.2 per cent in Quebec and 8.9 per cent in Ontario. These figures may seem impressive at first glance, but upon analysis, we can see that federal aid for post-secondary education has been declining for years.

In the beginning, the federal assistance introduced by a 1977 federal act was to be index-linked to general economic growth. However, the federal government limited the indexing of transfer payments for post-secondary education to 6 per cent in 1984 and 5 per cent in 1985. In the following years, other cuts were announced limiting the annual indexing to the increase in the gross domestic product less 2 per cent for 1986 and less 3 per cent from 1989. The 1991 budget brought more cuts by freezing subsidies for established programs financing until the 1994-95 fiscal year.

In constant dollars, the total federal envelope allocated to the Canada Student Loans Program has fallen substantially since 1986-87. This reduction in resources at a time when the student population is increasing has shifted to the provinces a significant amount of responsibility for financial assistance to students. The federal government's policies are reflected in its alternative payments to Quebec.

Alternative payments have not increased since 1987-88 despite an increase in the student population.

I would now like to talk a little about the situation of francophones outside Quebec. Again, the figures speak for themselves. If we look at a statistical profile on the link between education and labour force activity prepared in 1992 by the Canadian Institute for Research on Regional Development, we see that the regions where francophones are the most disadvantaged are those with the highest concentration of francophones.

An analysis of recent data from Statistics Canada also shows large disparities in education levels between francophone and Acadian communities and the rest of Canada. For instance, 45.2 per cent of francophones did not complete Grade 13 compared with 37.8 per cent of other Canadians.

Only 17.2 per cent of francophones completed high school compared with 17.4 per cent of other Canadians. Only 20.2 per cent of francophones have some post-secondary education compared with 23 per cent of other Canadians. And merely 17.4 per cent of francophones have gone to university as compared to 21.7 per cent in the rest of Canada.

Based on the same statistics, the rate of illiteracy within the francophone and Acadian communities in Canada is estimated at 30 per cent. At the same time, the rate of assimilation in these communities continues to grow, by 3.6 per cent per year on average now, a 4.5 per cent increase since 1986. I can see a direct link between the level of resources allocated to the education of francophones and Acadians and their rate of assimilation.

To conclude, I would like to quote some figures from the OECD. According to the OECD, between 35 and 50 per cent of the population in developed countries is living on the fringe of the labour market, not because they do not want to work, but rather because in the world today, not everyone is expected to contribute any more.

The fact of the matter is that the social fabric is deteriorating very rapidly and an increasing number of people are being more and more permanently excluded from work. It has got so bad that many young people, our future, now see no point in going to school and looking for a job impossible to find.

High drop-out rates in high school and unprecedented rates of functional illiteracy among young people are alarm bells that we can no longer ignore.

In view of the fact that all the experts agree that job creation through economic growth alone is a dangerous mirage, one can wonder what the Minister of Human Resources Development is trying to do by making it easier for students to get into debt while knowing that it will be next to impossible for them to find, in the short term, a decent job to pay off their school debts.

With this bill, the Minister of Human Resources Development proves once more that this government has no intention whatsoever of dealing with the real problems or trying to meet the real needs of the young people in terms of post-secondary education.

Where are the positive measures to boost employment? Certainly the minister does not expect to improve post-secondary education in Canada with those contained in Bill C-28.

This government is turning a deaf ear to the harsh realities our young people are confronted with today and it is dismissing the impact of the many changes which hinder their integration in our society.

In the absence of any real job development strategy centred on their needs, many young people have simply decided to quit school and join the ranks of UI and welfare recipients.

We Reformers understand that in order to sustain our standard of living the youth of Canada must be properly educated with the goal of becoming net contributors to Canadian society. Money wisely spent in this regard is an investment in the future. Our looming debt load and increasing numbers of students however have meant that for many years the funding of post-secondary education has suffered from less money going to more people.

Strains to the system are increasingly evident. Cuts to funding and overcrowding are diminishing the quality of education in Canada and increasing the costs of education to students. Yet these same students find themselves less able to pay back the money they owe because of the growing gap between what they learn in the school and what they need to know to find meaningful, well paid employment.

The less able they are to financially benefit from their schooling, the less able they are to pay back their loans, the less money there is in the pot for future educational requirements and the entire system spirals down toward new depths of mediocrity.

That is the present system of post-secondary education in this country. Obviously something needs to be done to address this problem. Is Bill C-28 an adequate response? My answer is only partially.

With apologies to friends in the medical community, I am going to use a medical analogy to describe our position with regard to this bill. When someone staggers into the emergency room of a hospital haemorrhaging all over the place, the first thing the staff has to do is deal with the immediate emergency, stanch the bleeding and stabilize the patient. The next thing which must be done is assess the reason for the damage and determine what if any long term treatment is needed to bring the patient back to full health. There is little point in doing one without the other.

The way I view this legislation is that the government is addressing the immediate emergency of post-secondary education but has failed to operate anything but a band-aid solution to what is really a more complicated problem requiring radical treatment.

While Bill C-28 offers short term relief to those hurting most from this system, it fails to treat the underlying problem. Therefore our support for Bill C-28 is qualified. As Reformers we want to offer as part of this debate the second half which is missing from this legislation, an alternative to a system which is demonstrably sick.

Before I put forth our position I would like to comment specifically on the positive and negative aspects of this legislation. On the plus side, Bill C-28 does offer a number of improvements to the old system and for that the government should be commended.

The increase in loan limits offers short term relief to students who have had to pay for increasing educational costs with a smaller purse.

The movement of responsibility for the collection of loans to the banks to decrease the default rate currently at 25 per cent and save the government considerable money, the revision of the eligibility criteria to emphasize academic results and the expansion of the assistance to apply to a broader range of educational institutions are all welcome changes and again I commend the government.

Finally, it has made some movement toward the area of an income contingent repayment system although it is far too timid in our opinion. I will return to that later.

To balance this assessment out, there are other parts of the legislation which are not so commendable to us as Reformers and in our opinion fail to serve the best interests of post-secondary students.

The government has not changed or harmonized the needs assessment criteria among the provinces. For example, students coming from the family farm may find themselves disqualified for assistance because the on-paper assets of the farm are deemed too high. The fact that these non-liquid book assets have nothing to do with the ability to individually finance one's education inherently discriminates against a large segment of our students.

This is further compounded by a reverse discrimination built in to the new grant program whereby only specially designated groups in our society will be eligible based on arbitrary non-financial criteria such as gender. We understand and agree with extra help for the disabled but surely a two-tier system of financial assistance is discriminating against those who lack the politically correct gender to qualify.

We also have serious problems with this legislation regarding the minister's discretionary powers. In many areas they have amounted to a blank cheque, specifically in clause 5 dealing with any future negotiated agreement with the lenders, and clause 15 which governs the regulations that flesh out the principles in the bill.

Since the upcoming negotiated agreement with the banks is fundamental to the whole issue of student financing-and I think the minister would agree this is really so-why are the conditions of this agreement not incorporated in the legislation so that Parliament can scrutinize and, if necessary, amend it?

With regard to the regulations, we would like the legislation to specifically mandate that they be referred to the House standing committee for review before coming into effect. Such a directive would rightly transfer power away from the department officials and toward the more accountable Parliament.

The Liberal red book section on parliamentary reform specifically states:

-a Liberal government will give MPs a greater role in drafting legislation through House of Commons committees. These committees will also be given greater influence over government expenditures.

Now here is a perfect opportunity for the minister to make good on his promise or conversely, demonstrate to the Canadian people the emptiness of those words.

These are the types of improvements we would like to see made to the bill at committee stage. We will certainly be working toward that end.

As Reformers we believe our role as an opposition party lies farther than just opposing everything the government proposes. We believe we have the responsibility to offer to the Canadian people a constructive alternative to the proposals put forth by the government and that is what we will be doing today. It is particularly important with regard to this bill since the government has failed to show long term leadership toward the issue of funding and providing post-secondary education in this country.

With the present system fiscal transfers under the established programs financing or EPF act have increased much more slowly than the rate of inflation during the 1980s. This is despite increased enrolment. Another flaw is that the federal government is unable to target its transfers specifically to education which means that the provinces have the ability to divert some of their funds to other social areas.

Since the federal government transfers money to the provinces based on population and not enrolment, what happens when a province's universities are in such demand that they attract large numbers of people from other parts of the country? They are penalized in essence for their success.

Such is the situation in Nova Scotia where there are as a proportion of the population more full time undergraduate and graduate students studying in its institutions than those of any other province, a whopping 54 per cent more than the Canadian average. Yet under the present EPF system this amounts to a financial penalty for building a high quality post-secondary education system that attracts out of province students. Where is the logic in that?

Given our fiscal reality it would be misleading to tell people we can fix the problem by pouring in more money we do not have. That is old style politics: promising the moon and offering no means to pay for it.

The public demand more from their representatives today. If we cannot promise to spend more, we can do better with what we are able to spend. This is where our proposal comes in, what we have called the advanced education voucher system.

Right now the federal government spends approximately $2 billion a year on transfers for post-secondary education. Under our proposal this amount would be divided into 650,000 vouchers of $3,000 each. These vouchers would take the form of grants to students which they could spend only on higher education anywhere in Canada. Students would turn over their vouchers to the colleges or universities in which they enrolled. The institutions would redeem the vouchers for cash from the federal government.

The reason for this reorganizing of federal funding for higher education is straightforward. Under our new system the effective choice and bargaining power of students will be increased because they will now have the power to spend their voucher where they can get accepted. Colleges and universities will be encouraged to compete for students in order to get the cash value represented by the voucher.

The focus of our institutions will shift from governments as a source of funding to the students who will now be bringing with them not only their tuitions of $2,000 or more but their vouchers worth another $3,000.

We believe the federal voucher system would work in the right direction by encouraging universities and colleges to compete for enrolment. This would set up incentives for universities to emphasize teaching and the other aspects of university life which attract students, such as the rate of employment for their recent graduates.

For those who may want to lament these proposed changes and the pressures they will place on our universities to compete, it is worthwhile to refer to a recent Globe and Mail editorial entitled: ``University heal thyself''.

While not recommending any particular solution, it very aptly presents the problems in our current system that our voucher system would address. The facts are that financial and other pressures are forcing our post-secondary institutions to review their mandates and in many cases work smarter with less money. Here is a quote from the Globe and Mail article:

Over the past generation Canadian universities have succeeded in being all things to all people. Governments financed the creation of new institutions and programs to serve a vastly expanded and more diverse clientele, all reaching for the middle class dream.

For the next generation, for financial and other reasons universities face a tougher job to choose between what they do well and what they do less well. They

will either have to make the changes themselves or allow these changes to be forced upon them by governments.

Increasingly, universities will have to be more inventive about carving out an area of expertise and delivering it in ways that are transparent to students, faculty and the public. If Canadian universities are to move beyond the rhetoric of excellence and quality in post-secondary education, they will have to become less homogeneous than in the past. Universities will also have to become more transparent in deciding what programs to save or drop in the name of quality.

Our voucher program changes the way funding is delivered to the universities and colleges and allows them more freedom to adapt themselves so as to meet these goals.

There is another immediate real world advantage of vouchers. Federal support for advanced education is in serious danger of being eroded down to almost nothing-and this may sound cynical but I must put it forward-because federal politicians derive few political rewards from providing it. They transfer the money to provincial politicians who then reap the political rewards of building campuses, providing programs and appointing their faithful to boards of governors. In today's age of austerity there are few powerful advocates in Ottawa compared to those who lobby for medical care, aboriginal land claim settlements, or subsidies to business.

At one stroke the advanced education voucher system would create a large and powerful political force for higher education at the federal level. This force would consist of students, parents, husbands and wives, all those who receive the vouchers and participate in decisions about how to use them. Advanced education could then compete on more equal terms for its proper share of what government could afford to spend.

That is our constructive alternative to the present system of funding post-secondary education, but this would only partially address the financial pressures of our students. We would also change the current financing system so that every student was eligible for loans under an income contingent repayment, or ICR, plan.

ICR is not a new concept. There are currently different elements of ICR implemented in three countries, as the minister pointed out, in Australia, New Zealand and Sweden. Simply put, it is a program which allows a student to take out a loan regardless of whether they are dependent on their parents. Students are not penalized on the basis of their parents' wealth or more accurately, middle class status.

Under the current system it is often those coming from the middle income level who find it most difficult to go to school. Their families do not have the funds to pay for the schooling directly, yet the government says that they are not poor enough to qualify for assistance.

Under the ICR plan everyone would be eligible because it would become the student's total responsibility to assume loan payments commencing when they graduated and had a job. Their repayment would be based on a flat percentage of what their salary happened to be.

Under one proposal, if the student had a job with an annual income of $10,000 to $12,000, then the loan payments would be approximately 3 per cent, or $350 a year. As an individual's income increased toward say, $50,000 the rate of pay back would increase 4 per cent and then 5 per cent until they were paying approximately $2,500 a year, until their debt was paid off.

With ICR, if the graduate became unemployed then the payments would be deferred until their annual income rose to exceed the set threshold. If they were unable to pay off the debt in 15 years, then the remaining sum would be forgiven. Also, if the graduate were to die or become permanently disabled, the debt would be forgiven. Since forgiven debts would have to be paid off somehow under ICR, those graduates with the higher income would be charged with an interest rate higher than the government's borrowing rate to offset the forgiven debts.

This system would eliminate the complicated, arbitrary and often uneven eligibility process for financial assistance across the country. ICR would not have any eligibility processes due to the fact that the payments would become the sole responsibility of the student during the 15 years following graduation.

The repayment schedule would eliminate the current situation of students with very low paying entry level jobs being forced into default simply because their loan repayment rates are too high for their salaries.

Under ICR the amounts of money they would pay would be determined by their annual income as determined from their tax return. This system however could only run smoothly if the ICR recipient had entered a proper and accurate income statement. Safeguards would have to be built into the system to prevent fraud or misuse of the funds borrowed.

How would we initially fund such a system, especially since the federal government's cupboard is bare? One way would be to raise funds through the current sources, the commercial banks.

Under the current system if a person defaulted on their loan then the bank would have to hire a private collection agency to collect the owed money. The collection costs were nearly $11 million in 1987-88. In the ICR system the lending program could be administered by an independent agency which could raise funds from the issue of bonds while a stock exchange for second-hand bonds, similar to the Student Loan Marketing Association in the U.S., could subsequently be developed.

Another government saving would be the significant reductions in write-offs and the new ability to charge compound interest according to the full duration of each loan.

With the ICR program it would be possible for the universities to become independent from the governments by allowing them the freedom to raise and set their tuition fees as they felt necessary. It makes sense that medical school tuition rates ought to be significantly higher than a post-graduate arts program, since a doctor's earning power is much greater. Therefore the medical school graduate ought to be able to afford a higher school debt load and loan repayment cost.

I realize that any increase in tuition fees to bring them more in line with the actual cost of education is bound to be met with howls of protest from certain areas. Student leaders in Canada have stridently opposed any increases as unfair to lower income students and a deterrent toward attending school.

However, we believe that under our ICR program the opposite would be the case. The argument of a deterrent factor simply fails to stand up to the facts. If these were the deterrents to schooling they claim they are, student leaders must have difficulty explaining why Canada with its fee structure has twice the percentage of university age people in school compared with France where fees are zero, or why the United States with the highest fees also has the highest percentage of its population in universities among the leading industrial countries.

Another criticism to this ICR proposal is that universities could poach each other's students especially when the market is so unstable. I would suggest this is not necessarily bad. If poaching took place, either by a university reducing its fees while keeping quality constant, or increasing its fees and offering more than a proportionate increase in quality via new courses, programs or facilities, the beneficiaries would only be the students in particular and our overall quality of post-secondary education in general.

These are the proposals we as Reformers would like to put forth as a creative alternative that would offer high quality, affordable, post-secondary education to our students.

Under Bill C-28 we may stabilize the patient and it is a slight improvement to the status quo, but that does not mean the patient is cured.

While for the benefit of our students in the system today we may support in principle the emergency procedures of this particular bill, we believe our responsibility goes much further. We owe our future students a better system than that which exists today, a better system that delivers an affordable, quality post-secondary education.

We believe these two goals can be achieved through our advanced education vouchers and an income contingent repayment plan. The options for our youth are either improving on a poor system or designing an entirely new system. As a long term policy we Reformers favour the latter.